In Q2, T-Mobile USA added 688,000 postpaid wireless customers, the first time in four years it added subscribers with service contracts. Contract customers usually spend more than prepaid customers. T-Mobile's stock has risen 50% since it closed its merger with MetroPCS on May 1.

Besides the Sprint-T-Mobile thoughts, speculation that satellite broadcaster Dish Network (DISH) could buy T-Mobile USA has helped boost T-Mobile shares. T-Mobile's rising valuation and purported asking price, though, lead some analysts to doubt that a Dish deal could get done.

The Department of Justice, however, shot down AT&T's proposed acquisition of T-Mobile in 2011, saying the deal would reduce competition. The Obama administration is likely to take the same stance on a Sprint-T-Mobile merger, especially if both firms are on the upswing rather than struggling, says Craig Moffett, of Moffett Research.

"The DOJ has made it abundantly clear that they want four (national) players, not three," Moffett told IBD. "T-Mobile's resurgence can only make the DOJ's stance that much more definitive.

"The recent actions of Sprint and T-Mobile are likely to reinforce regulators' instincts to preserve a four-player wireless market," Gallant said in a research report.

He says T-Mobile's aggressive pricing and new phone upgrades, which let consumers buy smartphones on installment payment plans, are the kind of pro-competition moves regulators want. Sprint recently cut the price of its unlimited data services, a move that regulators also view favorably, he says.

4G Competition Seen Rising

SoftBank, meanwhile, will provide Sprint cash to build out radio spectrum it obtained by acquiring all of Clearwire last month .

Verizon Wireless and AT&T have leaped ahead in 4G coverage.

Sprint lost 2 million subscribers in Q2, including 1.05 million postpaid customers, mainly due to the shutdown of Nextel's longtime iDEN network. Many analysts believe Sprint would start adding postpaid subscribers with its 4G buildout and new products and services it could offer.

T-Mobile USA's (TMUS) apparent revival and views that Sprint's 4G network upgrade will heat up competition make it less likely regulators would approve any merger of T-Mobile and Sprint.

In Q2, T-Mobile USA added 688,000 postpaid wireless customers, the first time in four years it added subscribers with service contracts. Contract customers usually spend more than prepaid customers. T-Mobile's stock has risen 50% since it closed its merger with MetroPCS on May 1.

Besides the Sprint-T-Mobile thoughts, speculation that satellite broadcaster Dish Network (DISH) could buy T-Mobile USA has helped boost T-Mobile shares. T-Mobile's rising valuation and purported asking price, though, lead some analysts to doubt that a Dish deal could get done.

The Department of Justice, however, shot down AT&T's proposed acquisition of T-Mobile in 2011, saying the deal would reduce competition. The Obama administration is likely to take the same stance on a Sprint-T-Mobile merger, especially if both firms are on the upswing rather than struggling, says Craig Moffett, of Moffett Research.

"The DOJ has made it abundantly clear that they want four (national) players, not three," Moffett told IBD. "T-Mobile's resurgence can only make the DOJ's stance that much more definitive.

"The recent actions of Sprint and T-Mobile are likely to reinforce regulators' instincts to preserve a four-player wireless market," Gallant said in a research report.

He says T-Mobile's aggressive pricing and new phone upgrades, which let consumers buy smartphones on installment payment plans, are the kind of pro-competition moves regulators want. Sprint recently cut the price of its unlimited data services, a move that regulators also view favorably, he says.

4G Competition Seen Rising

SoftBank, meanwhile, will provide Sprint cash to build out radio spectrum it obtained by acquiring all of Clearwire last month .

Verizon Wireless and AT&T have leaped ahead in 4G coverage.

Sprint lost 2 million subscribers in Q2, including 1.05 million postpaid customers, mainly due to the shutdown of Nextel's longtime iDEN network. Many analysts believe Sprint would start adding postpaid subscribers with its 4G buildout and new products and services it could offer.

"If all four carriers are doing well, it will make it hard for Sprint and T-Mobile to merge under this administration," UBS analyst John Hodulik told IBD via e-mail. "(T-Mobile) would have to lose momentum and go downhill for it to happen."

Both T-Mobile USA and Sprint do face challenges on the comeback trail.

T-Mobile lowered its EBITDA (earnings before interest, taxes, depreciation and amortization) guidance for 2013. T-Mobile will face higher costs as it expands the MetroPCS brand into more markets, analysts say.

Analysts expect marketing and advertising battles to intensify.

With the wireless market maturing, revenue growth has slowed for service providers. Postpaid subscriber growth has slowed at Verizon Wireless and AT&T, which both missed Q2 profit estimates.

Hodulik says T-Mobile's price-cutting and its "un-carrier" strategy — no long-term contract required, and users can upgrade to new phones for "free" and pay in monthly installments — and Sprint's expected 4G promotions will likely take a toll on profit margins across the industry as competition ramps up.

"We do not expect the pressure from T-Mobile to abate," he said in a report. "In fact, the Un-carrier 3.0 initiative, expected in September or October, will probably be another body blow for the industry. Beyond this, we expect SoftBank-backed Sprint to enter the fray in 2014."

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